Sirius XM Q3 Earnings: Key Takeaways

SiriusXM (NASDAQ: SIRI) reported its Q3 earnings on Wednesday, October 25. The company’s quarterly revenues grew by 8%, reaching an all-time high of $1.4 billion. SiriusXM reported an addition of 311,000 new self-pay subscribers. Meanwhile, its EBITDA also increased by close to 12% year over year in Q3, taking the margins to an all-time high of 39.9%, driven by continued strength in subscriber additions and impressive ARPU of $13.41. Going forward, we expect solid growth in Sirius XM’s subscriber base to continue, backed by high penetration in the new car market and increasing penetration in the used car space.

SiriusXM Grows Steadily In The Used Car Market

While new car sales continued to soften in the third quarter, SiriusXM has steadily increased its penetration in the new car market to around 76.5% in the recently concluded quarter. This has enabled the company to overcome the slowdown in new car sales. In addition, SiriusXM has been concentrating on increasing its penetration rate in the used car market as well, where its penetration rate sits at around 35 percent. The subscriber additions from used cars grew by 14% in Q3, and the company believes that in fiscal 2017, the volume of used cars sold with SiriusXM could exceed the new car volumes.

Effects Of Changing Technology

In an attempt to stay on board with the latest technology, SiriusXM has integrated with Alexa, which is in line with the connected vehicle approach that the company wants to exploit going forward. SiriusXM’s availability on 128 million connected devices – including smart TV’s, gaming stations, and its plans to launch on other platforms – and the possibility of further expansion should boost its presence and revenue in the upcoming years.

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